Sainsbury's, Accenture and the £3bn IT flop

Sainsbury's, the UK supermarket group, is blaming Accenture for the disastrous state of its new logistics system. It is recruiting 3,000 shelf stackers to fix the damage manually.

The new system is unable to track stock properly and Sainsbury's is taking a £550m charge to its profits. Writing off IT assets which are now useless will cost the supermarket £140m, writing off the cost off automated equipment in its distribution centres will add another £120m. The failed systems have also cost Sainsbury's £30m in stock lost or damaged by the new system.

The four-year "Business Transformation Programme" has cost £3bn was the pet project of previous chief executive Sir Peter Davis. Cost of IT as a percentage of sales is higher now than it was four years ago.

The supermarket group is to renegotiate its contract with Accenture, which will it see it rebuild its inhouse IT team.

In a statement today, the company said:

The objective is to simplify systems to increase effectiveness. Key initiatives have been actioned.

The rollout of future systems and upgrades has been slowed down while focusing on driving benefits from the systems already in place. Priority will be on forecasting and scheduling systems.

Certain systems cannot now be used and others will require additional expenditure to simplify and improve their functionality.

Sainsbury's chief executive Justin King complained: "'We will renegotiate our contract with Accenture because they can and should help us get systems where they need to be and because the current contract has been unable to do that. The balance of responsibility currently lies far too heavily on Accenture."

But Accenture was quick to distance itself from the problems, stressing the firm was not involved in Sainsbury's four automated (or not) distribution depots. ®